Eesti Energia looking into wood use in oil shale power plants

Enefit Power is exploring the possibility of burning wood pellets instead of oil shale in the blocks of the Eesti Power Plant. While the forestry industry sees this as a good way to redirect materials into local production, environmentalists fear it could lead to an increase in logging volumes.
At the Auvere, Balti and Eesti power plants owned by Eesti Energia subsidiary Enefit Power, oil shale has so far been burned using two technologies — newer fluidized bed technology and an older dust combustion technology dating back to the Soviet era.
Estonia has pledged to the European Union that electricity production from oil shale will be phased out by 2035. This raises the question of what will happen to the power plants that have been burning oil shale until now.
While the newer fluidized bed boilers allow for the combustion of biomass or peat in addition to oil shale, the older dust combustion units have so far only been able to burn oil shale.
Enefit Power is now investigating whether it would be economically viable in the future to burn something other than oil shale in these dust combustion units.
Specifically, the focus is on wood pellets, also known as wood granules. Pellets are primarily made from dried and compressed sawdust and other forestry by-products.
Enefit Power CEO Lauri Karp told ERR that up to three dust combustion units at the Eesti Power Plant in Auvere could potentially be converted to burn pellets. This concerns the third, fourth and sixth units, which together have a capacity of 450 megawatts.
Electricity produced from oil shale is expensive, which is why these three production units were only used for a few hours last year. For example, electricity was generated from the fourth unit for just 83 hours — mainly during periods of extreme cold when there was little wind and solar power in the region.
Karp explained that the current production cost of these oil shale units is around €200 per megawatt-hour or more. Under the European Union's renewable energy directive, burning wood, unlike oil shale, is not subject to carbon charges.
"As long as wood biomass remains carbon-neutral in the energy sector, this project makes sense. Additionally, we see an opportunity to use domestic raw materials in our power plants, thereby reducing dependence on imported fuels (such as natural gas). The availability of these raw materials also supports jobs, so we definitely see a connection with employment as well," Karp said.
Cost price €100 per megawatt-hour
According to Karp, if electricity were produced solely from pellets, the production cost would be around €190-200 per megawatt-hour. However, if heat were also generated in addition to electricity, the cost could be reduced to approximately €100 per megawatt-hour.
This means that the project would be economically viable primarily if the power plant could produce both electricity and heat. "Looking ahead, the best combination for us in the future is definitely electricity and heat together," Karp said.
Currently, there is no heat pipeline from the Eesti Power Plant to Narva or any other settlement. However, the Balti Power Plant, located about 20 kilometers from Auvere, is connected to Narva's heating network. Unlike the Eesti Power Plant, however, the Balti plant does not have dust combustion units.

Karp noted that discussing the construction of a possible heat pipeline is premature at this stage. Right now, thermal analyses are still being conducted at the Eesti Power Plant to determine whether switching to pellets is even feasible.
But how much would it cost to convert the old dust combustion units to burn wood pellets?
Karp stated that, as a rough estimate, each megawatt of production capacity would cost about €500,000 to convert. This means that converting a single 150-megawatt unit to pellets would cost €75 million, while converting three units would amount to €225 million.
"The biggest challenge is positioning the power plant's storage bunkers so that pellets can be fed from them into the system. It's also a major logistical challenge to figure out how the pellets would be transported from ports to the power plants," Karp explained.
Eesti Energia stated that, for now, the analysis will be completed first and then discussions — including at the national level — will begin on whether and how to secure the necessary funding.
Estonian pellets currently going to coal plants in the UK
Deputy Secretary General of the Ministry of Climate Jaanus Uiga stated that if Enefit Power's analysis shows that producing electricity or heat from wood pellets results in lower electricity prices and allows the production units to participate in the market more frequently, then it could be a reasonable solution.
According to Henrik Välja, CEO of the Estonian Forest and Wood Industries Association, the majority of wood pellets produced in Estonia are currently exported to Europe and the United Kingdom. There, they are used for electricity generation either in old coal-fired power plants or in more modern combined heat and power (CHP) plants.
"For pellet producers, it doesn't make a big difference whether they sell their material to Estonia or the United Kingdom — their interest is in selling it at the best price. However, if this shift could help lower Estonia's energy prices and reduce our carbon footprint, then the entire economy would benefit," he said.
Välja noted that Estonia currently produces about 1.5 million tons of wood pellets per year. The main producers are Graanul Invest and Warmeston, but there are also smaller manufacturers. Some wood industries have even installed pellet presses alongside their operations.
Latvia also produces around two million tons of pellets annually and, according to Välja, many of the companies operating there are Estonian-owned. For example, he pointed out that Graanul Invest's operations in Latvia are even larger than in Estonia.
Conservationists fear logging pressure
Uiga, stated that carbon emissions from electricity production are considered zero if the wood comes from sustainably managed forests.
"If Enefit Power were to use the wood pellets that are currently being exported, it would not create additional pressure for logging in Estonian forests. As I understand it, Estonia already produces these pellets in sufficient quantities, so if a local consumer were to start using them instead, the environmental impact would actually decrease since there would be no need to transport the pellets over long distances," Uiga said.
However, Silvia Lotman, head of the forest program at the Estonian Fund for Nature, told ERR that Estonian forests are not currently managed sustainably. She added that the forestry and land-use sector as a whole is currently a greenhouse gas emitter rather than a carbon sink.

As long as the forestry sector is not absorbing greenhouse gases, she believes it would not be reasonable to plan new wood consumption capacities in Estonia.
"Of course, if these pellets already exist, it is better to use them domestically rather than exporting them. But I cannot imagine any mechanism by which the state could guarantee that logging pressure on forests would not increase," Lotman said.
The Ministry of Climate has assessed that, under current measures, Estonia will not meet its climate targets for the forestry and land-use sector in either the first compliance period (2021-2025) or the second (2026-2030). ERR has previously reported that, as a result, Estonia will need to purchase greenhouse gas emission allowances worth anywhere from tens to hundreds of millions of euros in the coming years.
Henrik Välja, representing the forestry industry, disagrees that burning pellets in Narva's boilers for electricity generation would increase logging volumes. He emphasized that pellets are primarily produced from by-products.
"The amount of raw material available for pellet production depends on developments in other sectors of the wood industry — such as sawmills and planing mills. It depends on whether there is demand and a market for the most valuable wood from forests, such as sawn timber, veneer logs and pulpwood," Välja explained.
He added that it is quite difficult to bring in additional raw material specifically for pellet production.
"It could affect how much logging residue is collected or what types of forests are harvested, but I don't believe it would significantly impact the overall logging volume," Välja said.
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